Corruption Nation: Why Bo Xilai Matters

In December, 2006, police in the Chinese territory of Macau arrested Ao Man Long, the region’s secretary for transport and public works, who had been collecting kickbacks over a period of seven years. Investigators found that he and his family had received more than a hundred million U.S. dollars, which he had detailed in a collection of “friendship notebooks.” The indictment itemized so many individual bribes that reading it aloud at his trial took seven hours. Ao was sentenced to the maximum penalty—twenty-eight-and-a-half years—and the judge said that, were a sentencing limit not in place, the scale of the offenses merited a prison term of three hundred and sixty years. For taxpayers, it was not a victimless crime: a major bridge in Macau, for which Ao is said to have received $1.7 million in kickbacks, was reportedly built of such poor quality that it may be need to be overhauled only seven years after it was built.

The astonishing thing about the Ao Man Long case is that it is not astonishing. The scale, the audacity, the damage to the public good—all of it is in keeping with a pattern of epic corruption that has become the most dangerous side effect of, and threat to, China’s boom. It is not just a Macau problem. (I wrote about the explosive effects of Macau’s rise in “The God of Gamblers,” in the April 9th issue of The New Yorker.) On the contrary, the Ao case is a good example not because it is extraordinary, but because it was adjudicated in a Western-style courtroom (Macau uses the Portuguese system), so the details are public. But Macau is just the end of a public-cash pipeline that begins in China.

In recent days, the story of disgraced Communist Party boss Bo Xilai has moved from a Le Carré phase to an Enron phase, as reporters go beyond the murder investigation facing his wife and begin to unravel the family’s economic empire. The hardest facts so far come from Bloomberg, which used corporate and regulatory filings to map out a family tree, in which the sisters of Bo’s wife, Gu Kailai, “controlled a web of businesses from Beijing to Hong Kong to the Caribbean worth at least $126 million.” (This is difficult reporting, because it requires cutting through fake names to establish sibling and parent relationships that are treated in China like secrets in order to prevent exactly this kind of accounting.) Reuters, citing sources familiar with the investigation, reports today that the British businessman Neil Heywood, who was close to the family, “was poisoned after he threatened to expose a plan by a Chinese leader’s wife to move money abroad.” That report says that Heywood was done in by a poisoned drink at Nanshan Lijing Holiday Hotel, also known (naturally) as the Lucky Holiday Hotel.

How much money did they want to get out of the country? So far, the only figures come from overseas Chinese-language news sites, without sources, which allege that Bo’s wife has told investigators that she transferred overseas $1.2 billion—that’s with a “b.” As ever, online rumors require skepticism, but in this case, they have often proved to be true—so they are worth noting for the moment.

How common is this? Let’s go back to Macau for a window into China’s corruption problem. Take the executive deputy mayor of Shenyang, Ma Xiangdong; he lost four million dollars of public funds in 2002 at casinos in Macau and Las Vegas. His boss, the mayor, was found to have six million dollars worth of gold bars hidden in the walls his houses and a hundred and fifty Rolexes. Or, consider the pair of Party propaganda chiefs—named Zhang and Zhang—who lost more than $12 million in Chongqing public funds at the Lisboa Casino in 2004. Or Zhang Jian, a former Party chief in Jiangsu, who lost $18 million. Or Li Weimin, a Party chief in Guangdong, who lost $11.5 million. Or Liu Xinyong, a local bureaucrat from Chonqqing, who stands out not for scale but for speed: he managed to lose a quarter of a million dollars in bribes in just forty-eight hours in Macau.

Among themselves, Chinese officials no longer pretend that the problem doesn’t exist. Speaking at a national legislative conference in January, 2010, Chen Jixing, the Party Secretary of the southern city of Jiangmen, said that he had sent his own staff down to Macau to check casinos for signs of Chinese public servants gambling away the treasury. Chen told the group, “If you’re the head of public security, and you’ve been to Macau twenty-something times in one year, what were you doing there? Buying medicine? You really expect us to believe that?”

So many Chinese officials have been arrested for embezzling funds through Macau that two scholars devoted a study to the subject. Zeng Zhonglu and David Forrest calculated that the average corrupt official or senior manager in a state-owned company lost $3.3 million before getting caught. If the scale of money involved in the Bo Xilai case seems implausible, these cases are worth remembering. And, last June, the People’s Bank of China briefly posted a study on its Web site estimating that in recent years eighteen thousand corrupt officials have fled the country with about $120 billion in stolen money. (It was swiftly removed from the site.)

Details matter. There is a theory going around that the Bo Xilai case will not alter Chinese public attitudes about official abuse because, it is said, the Chinese people have already acclimated to the existence of corruption. But there is a difference between knowing it exists in the abstract and confronting the cold, blunt accounting—seeing the cars and tuition it buys, realizing the land that was seized to pay for it, and working out how those funds might have been used for better health care or education. If the rumors about Bo Xilai turn out to be true, people just might start to wonder: What does this say about all the other rumors?

Photograph by Matthew Niederhauser.

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